SPORTS BUSINESS

SPORTS BUSINESS; Jordan-Falk Relationship Poses Conflict of Interests

By Richard Sandomir

Published: January 30, 2000

David Falk held up his hand, as if to stop the onrushing verbal traffic.

''I'm not talking,'' said Falk, the powerful agent. This was 11 days ago, when Falk's top client and moneymaker, Michael Jordan, announced his return to basketball by purchasing a piece of the Washington Wizards and becoming the president of basketball operations.

Falk is still not talking, preferring not to field questions about his revamped relationship with Jordan, which had its final details hammered out in Falk's Washington office. Now, in addition to Falk's continued role in marketing Jordan, which benefits the SFX Sports Group, of which Falks is the chairman, he, and SFX, will be negotiating the contracts of Wizards players with Jordan.

But there are questions, such as whether Jordan should recuse himself from negotiating with anyone from SFX, which agreed in 1998 to pay Falk up to $150 million for his firm. Or should Jordan recuse himself only if Falk is personally representing a player whom the Wizards are trying to sign? Two of the Wizards' best players, Juwan Howard, who is in the midst of a seven-year, $105.5 million contract, and Rod Strickland, are Falk men.

But steering clear of Falk's clients seems unlikely for Jordan, because Falk represents some of the National Basketball Association's best players, a power base that he has used to wield considerable behind-the-scenes power in the league. In all, SFX represents 78 N.B.A. players in contract negotiations.

No other team executive in the N.B.A. is in such an unusual and potentially awkward position. The Knicks' Scott Layden and the Nets' John Nash do not have to worry about these issues. They are not former $33 million-a-year players who chat with Tweety Bird and Bugs Bunny in MCI Worldcom commercials. Few general managers own a piece of the clubs they run or transact business with the agents who represent them in their off-the-court business.

It is a clear conflict, and there are no rules governing how to deal with it. And there may be more examples of this in the future, said Leigh Steinberg, the agent-lawyer.

''We're turning out a generation of athletes whose wealth is inestimable, who'll walk away from the game with 60, 80, 120 million dollars,'' Steinberg said. ''We'll see a wave of players entering ownership.''

But Steinberg does not think the potential conflict presents an insurmountable or even difficult problem. The possibility of a conflict depends, he said, on whether the player-turned-owner continues a business relationship with his agent, as Jordan has.

And if there is a conflict? ''I might have another lawyer in the office handle his business,'' Steinberg said.

Jordan seemed unconcerned last week about any conflicts. He said, in fact, at his Wizards' coronation, that he looked forward to receiving future advice from Falk.

The N.B.A. is looking at the unusual relationship, but here is a near-certainty: because it involves Jordan, the most favored son, the N.B.A. will be genteel in assessing whether his new connection to Falk requires any monitoring.

The only rule that covers the Falk-Jordan tie is in the by-laws of the National Basketball Players Association; it bars agents of players from negotiating the contracts of general managers and other team officials.

Here are some threshold questions for judging the Jordan-Falk connection: Is anybody being hurt? Are they negotiating as fiercely as possible or are they doing less than their best because of their previous connections?

For instance, does Falk steer top draft picks or free agents to Washington for less money than they might be worth elsewhere to embellish Jordan's status and elevate himself in his continuing power struggle with David Stern, the N.B.A. commissioner?

''Michael Jordan is a powerful selling tool for any franchise,'' Steinberg said. ''No question, when a player considers free agency, the fact that Michael's running a club is a heavy incentive for a player to sign, even for less money.''

Whether the naturally adversarial relationship between a team executive and an agent will develop seemed to be on Jordan's mind on Jan. 19. ''I'm sure people think David Falk and his whole agency will run the team,'' he tartly said. ''But he works for me; I don't work for him.''

But if Falk literally works for Jordan, can he simultaneously and fairly work for another player and negotiate a contract for him with Jordan? It remains to be seen if Jordan, by putting Falk in his place so publicly, was issuing his declaration of executive independence.

Photos: Michael Jordan, left, and his agent, David Falk, who is a powerful force in the N.B.A. (Ozier Muhammad/The New York Times)